It’s Time to Face the Long-Term-Care Dilemma

DAVID BLUMENTHAL: Every day, about 6,000 U.S. baby boomers turn 65 and become eligible for Medicare. But Medicare doesn’t cover what can be the largest cost to seniors–long-term services and supports. These include assistance with the basic tasks of everyday life, such as bathing or feeding oneself, rather than strictly medical care. Medicaid will pay for these services. But to be eligible for Medicaid, you have to be poor.

For the 69% of seniors who will need long-term care, there are few good options. Many will receive help from family or friends, but AARP says that declining family size means a 43% reduction in the supply of these “informal” caregivers by 2030. Roughly 12% of Americans over 65 have private long-term care insurance, but that paltry proportion is declining rather than growing.

Another alternative is to pay for long-term care out of pocket, but few people can afford this option for very long. In 2013, the average annual cost of a nursing home was over $87,000. Assisted living averages $42,000 annually and a full-time home health aide is about $51,000. The average 50-year-old has savings of just under $44,000.

There are other challenges. Increased life expectancy will likely mean more demand for these services, and rates of disability for boomers are increasing, due in part to the obesity epidemic.

There is some good news: Medicaid has increased funding in recent years for home- and community- based long-term care services, and states are innovating to promote and support informal caregiving. But it still adds up to a frightening reality. For many boomers, the only option will be spending down to poverty, moving into a nursing home and having Medicaid foot the bill. To be sure, Medicaid provides a critical safety net for Americans who find themselves in this situation–but is this how anyone would choose to spend the last months or years of their life?

With private markets failing and demand growing, we clearly need creative new solutions to protect the avalanche of boomers against a huge threat to the quality of their ever longer lives.

Dr. David Blumenthal (@DavidBlumenthal) is the president and CEO of the Commonwealth Fund, a national health-care philanthropy based in New York.